Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Index Rebalance

<ul>
<li>The December rebalance of the <a href="https://www.smartkarma.com/entities/kraneshares-csi-china-internet-etf" target="_blank" data-smartkarma-citation="entities:28208:1" rel="noopener">KraneShares CSI China Internet ETF (KWEB US)</a> will take place at the close of trading on 13 December.</li>
<li>
<a href="https://www.smartkarma.com/entities/cloud-village-inc" target="_blank" data-smartkarma-citation="entities:33412:1" rel="noopener">Cloud Village (9899 HK)</a> is an add while <a href="https://www.smartkarma.com/entities/lufax-holding-ltd" target="_blank" data-smartkarma-citation="entities:29690:1" rel="noopener">Lufax Holding (LU US)</a>, <a href="https://www.smartkarma.com/entities/ping-an-healthcare-and-technology-company-limited" target="_blank" data-smartkarma-citation="entities:27008:1" rel="noopener">Ping An Healthcare and Technology (1833 HK)</a>, <a href="https://www.smartkarma.com/entities/zx-inc" target="_blank" data-smartkarma-citation="entities:36624:1" rel="noopener">ZX (9890 HK)</a> and <a href="https://www.smartkarma.com/entities/ysb-inc" target="_blank" data-smartkarma-citation="entities:35982:1" rel="noopener">YSB (9885 HK)</a> are deletes.</li>
<li>The deletions of <a href="https://www.smartkarma.com/entities/ping-an-healthcare-and-technology-company-limited" target="_blank" data-smartkarma-citation="entities:27008:1" rel="noopener">Ping An Healthcare (1833 HK)</a>, <a href="https://www.smartkarma.com/entities/zx-inc" target="_blank" data-smartkarma-citation="entities:36624:1" rel="noopener">ZX (9890 HK)</a> and <a href="https://www.smartkarma.com/entities/ysb-inc" target="_blank" data-smartkarma-citation="entities:35982:1" rel="noopener">YSB (9885 HK)</a> were forecast and there will be positioning in the stocks. <a href="https://www.smartkarma.com/entities/lufax-holding-ltd" target="_blank" data-smartkarma-citation="entities:29690:1" rel="noopener">Lufax</a> was a close delete.</li>
</ul>


The December rebalance of the KraneShares CSI China Internet ETF (KWEB US) will take place at the close of trading on 13 December.

Cloud Village (9899 HK) is an add while Lufax Holding (LU US), Ping An Healthcare and Technology (1833 HK), ZX (9890 HK) and YSB (9885 HK) are deletes.
The deletions of Ping An Healthcare (1833 HK), ZX (9890 HK) and YSB (9885 HK) were forecast and there will be positioning in the stocks. Lufax was a close delete.


KWEB Index Rebalance: 1 Add & 4 Deletes in December

Asian Hedge Fund Manager, Long Short Equity, Macro

David Mudd

Equity Bottom-Up

Tencent Music Entertainment / Equity Bottom-Up

<ul>
<li>Hong Kong market sectors outperforming since the stimulus in September are Consumer Discretionary and Healthcare as Utilities, Telecom and Energy lag.</li>
<li>
<a href="https://www.smartkarma.com/entities/crrc-corp-ltd-461535b2-37ac-4589-b4d9-8b71c06c43b8" target="_blank" data-smartkarma-citation="entities:124:1" rel="noopener">CRRC Corp Ltd H (1766 HK)</a> gets BUY recommendations as its results point to continued strength in the rail equipment sector with passenger volume surging.
</li>
<li>
<a href="https://www.smartkarma.com/entities/tencent-music-entertainment-group" target="_blank" data-smartkarma-citation="entities:36601:1" rel="noopener">Tencent Music Entertainment Group (1698 HK)</a> reported solid results as it shifts to a pay-to-stream subscription model. <a href="https://www.smartkarma.com/entities/xiaomi-corp" target="_blank" data-smartkarma-citation="entities:24409:1" rel="noopener">Xiaomi Corp (1810 HK)</a> had a blowout quarter with EV sales surging.
</li>
</ul>


Hong Kong market sectors outperforming since the stimulus in September are Consumer Discretionary and Healthcare as Utilities, Telecom and Energy lag.

CRRC Corp Ltd H (1766 HK) gets BUY recommendations as its results point to continued strength in the rail equipment sector with passenger volume surging.


Tencent Music Entertainment Group (1698 HK) reported solid results as it shifts to a pay-to-stream subscription model. Xiaomi Corp (1810 HK) had a blowout quarter with EV sales surging.



BUY/SELL/HOLD: Hong Kong Stock Updates (NOVEMBER 18)

Overseas Chinese Equities, Aequitas Research

Ming Lu

Overseas Chinese Equities

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

<ul>
<li>The weak business, social entertainment, become insignificant in recent quarters.</li>
<li>All operating data in music is promising, including paying user base, ARPPU, and sublicensing revenue.</li>
<li>We set an upside of 20% and a price target of US$14.80 for the end of 2025.</li>
</ul>


The weak business, social entertainment, become insignificant in recent quarters.
All operating data in music is promising, including paying user base, ARPPU, and sublicensing revenue.
We set an upside of 20% and a price target of US$14.80 for the end of 2025.


Tencent Music (TME): All Cheerful Data in Music, To Grow in Q3 After 3 Flat Years

<ul>
<li>There are 38 adds and 29 deletes for the Hang Seng Composite Index (HSCI) at the September rebalance to take the number of index constituents up to 518.</li>
<li>We expect 33 of the 38 HSCI inclusions to be added to Stock Connect while we expect 27 of the 29 HSCI deletions to be removed from Southbound Stock Connect.</li>
<li>Since the start of the calendar year, shares held though Southbound Connect have increased in 22 of the 27 HSCI deletions that will also be removed from Stock Connect.</li>
</ul>


There are 38 adds and 29 deletes for the Hang Seng Composite Index (HSCI) at the September rebalance to take the number of index constituents up to 518.
We expect 33 of the 38 HSCI inclusions to be added to Stock Connect while we expect 27 of the 29 HSCI deletions to be removed from Southbound Stock Connect.
Since the start of the calendar year, shares held though Southbound Connect have increased in 22 of the 27 HSCI deletions that will also be removed from Stock Connect.


HSCI Index Rebalance: 38 Adds, 29 Deletes & Changes to Southbound Stock Connect

<ul>
<li>We see 37 potential adds (including plenty of new listings) and 25 potential deletes (on market cap and liquidity) for the Hang Seng Composite Index in September.</li>
<li>We expect 32 stocks to be added to Southbound Stock Connect following the rebalance while 24 stocks could be deleted from the trading link and become Sell-only.</li>
<li>There are stocks that have a very high percentage of holdings via Stock Connect and there could be some unwinding prior to the stocks becoming Sell-only.</li>
</ul>


We see 37 potential adds (including plenty of new listings) and 25 potential deletes (on market cap and liquidity) for the Hang Seng Composite Index in September.
We expect 32 stocks to be added to Southbound Stock Connect following the rebalance while 24 stocks could be deleted from the trading link and become Sell-only.
There are stocks that have a very high percentage of holdings via Stock Connect and there could be some unwinding prior to the stocks becoming Sell-only.


HSCI Index Rebalance Preview and Stock Connect: Potential Changes in September

China

NetEase Cloud Music operates as one of China's leading online music platforms, offering music streaming, membership subscriptions, digital music sales, and social entertainment services including live streaming and online karaoke. It provides an interactive content community for music enthusiasts with personalized recommendations. The company is headquartered in Hangzhou, China, and was launched in 2013.

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NetEase Cloud Music (9899 HK)

KWEB Index Rebalance: 1 Add & 4 Deletes in December

Cloud Village is an add while Lufax, Ping An Health, ZX and YSB are deletes. There will be capping flow for the large caps. Couple of surprises...

Brian Freitas

BUY/SELL/HOLD: Hong Kong Stock Updates (NOVEMBER 18)

Hong Kong has seen its Consumer Discretionary and Healthcare sectors perform well since the stimulus in September. CRCC has had several buy...

David Mudd

Tencent Music (TME): All Cheerful Data in Music, To Grow in Q3 After 3 Flat Years

The weak business, social entertainment, become insignificant in recent quarters. All operating data in music is promising, including paying user...

Ming Lu

HSCI Index Rebalance: 38 Adds, 29 Deletes & Changes to Southbound Stock Connect

There are 38 adds and 29 deletes for the HSCI at the September rebalance to take the number of index constituents up to 518. There will be a lot of...

Brian Freitas

HSCI Index Rebalance Preview and Stock Connect: Potential Changes in September

There could be nearly 80 adds/deletes for the HSCI in September. That will trigger changes to the Southbound Stock Connect list and increase flows...

Brian Freitas

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